Raise your yield on your Budapest property investment (x)
Managing a property investment from another country is challenging. Even if you have a friend, colleague or relative in Budapest to help, they will pobably not be able to give their full attention to the job. This is true even if your tenant comes from the same background as you do. "An Irish client rented out her flat to an Irish student studying in Budapest. Knowing the tenant well, the owner decided to manage the flat on her own, but finally she had to admit that she was incapable of handling all the duties from thousands of miles away" - as Judit Szelevényi, from ManageRent Property Management company in Budapest explains.
Apart from language barriers and cultural differences, other challenges include simple things like collecting the bills, communicating with local utility suppliers and condominium management companies, and filing your tax returns. And there are other pitfalls as well... This is how yields disappear Gabor Kiss, from Tower International, has already helped more than 100 property owners switch to professional property management. He has heard many stories of mismanaged properties. There are several unprofessional property managers and sometimes investors initially try to manage their properties remotely. Typical mistakes are bad management of the tenants, underpriced rents due to lack of market knowledge, and mismanaged taxing - resulting in huge sums of penalties. The majority of issues with bad tenants could be avoided by strict tenant screening prior to signing the lease agreement and by proper cash collection procedures. These are basic skills of a professional property manager in Budapest.
Kornél Kovács, an accountant in Budapest for Tower International, explains that the company employs several chartered accountants to optimize taxes for their international property investor clients. If tax payments are not up-to-date, owners are in danger of being fined by the Tax Authority, which will initiate a debt collection process. Kovacs points out that the Hungarian Tax Authority now has relations with many other countries' tax authorities which means they are able to collect penalties at an international level. "If situations like these spin out of control, the investor can find himself in a very gruesome situation: consequences could be very costly, penalty fees could sky-rocket and the owner could even lose his investment in a liquidation process. We have been able to save several properties from such situations" - says Réka Bálint, account manager at Catherine Dickens Properties, another Budapest property management company. Choose the right property manager in Budapest "A good property manager will look after the owners' intertests wholeheartedly" - explains Réka, who sais that this is valued by many experienced property investors, as they know that it is impossible to manage and rent an apartment remotely. A professional propety management company in Budapest will also create additional trust with the tenants. "There are 3 main elements of a good property management service: wealth protection, yield maximisation and ongoing communication. If any of these are lacking, this will negatively influence the level of income on the property" - explains Róbert Lángos (MRICS) Property Management Director at Tower International, the market leading property management company in Budapest. Tower claims to have a 98% occupancy rate on its' close to 1000 managed properties.
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